research and development | The Contracting Education Academy

April 26, 2019 By AMK

What the 809 Panel didn’t quite get right

The Section 809 panel offers an important new idea on how the defense acquisition system could be improved to provide the Pentagon greater access to innovative new technologies that are rapidly developed in the private sector.

But the panel fumbled its recommendations with a contradictory and incoherent legislative approach that would hurt more than it helps. That should not undermine the significance of the panel’s underlying idea: a new focus on the source of funding for commercial items instead of the marketplace in which they are sold. This could encourage companies to develop defense-unique products at their own expense. Today, many are driven away when they are forced to accept regulated pricing and burdensome, government-unique contract terms and conditions.

Successes and Failures

We had high hopes when we helped to write the commercial buying acquisition reforms in the Federal Acquisition Streamlining Act of 1994 and the Clinger-Cohen Act of 1996. These reforms broadened the definition of commercial items, established a commercial item preference, and authorized waivers to government-unique requirements and contract clauses for the purchase of commercial solutions.

As a result, the government went from 476 contracts under simplified commercial item procedures in 1996 to nearly 13 million contracts worth almost $75 billion in 2011. As our colleague Jon Etherton has explained, this enabled the U.S. government to catch up with the information technology revolution that had swept the private sector in the 1990s and likely saved the Department of Defense (DOD) billions of dollars by avoiding unnecessary research and development and the extended acquisition lead times associated with government-unique products.

Keep reading this article at: https://breakingdefense.com/2019/04/what-the-809-panel-didnt-quite-get-right-greenwalt-levine/

January 3, 2019 By AMK

DoD’s new rules of the road for ‘other transactions’

For over 60 years, the U.S. government has entered into agreements called “other transactions.”

The Other Transaction Authority, or OTA, permits specific agencies, including the U.S. Department of Defense, to enter into agreements “other than standard government contracts or other traditional mechanisms” like procurement contracts, grants and cooperative agreements.

While OT activity continues to increase, formal guidance regarding the effective use of such agreements has been sparse. In an effort to articulate some rules of the road, on Dec. 3, 2018, the Office of the Under Secretary of Defense for Acquisition and Sustainment issued its broad “Other Transaction (OT) Guide.”

While the OTA has been available to the DoD since the late eighties, the DoD has ramped up its OT activity in recent years to obtain research, cutting edge technology and even full production of military hardware, awarding “$21 billion through 148 OTAs between 2015 and 2017.”

Congress has stated that the DoD “has authority to use OTAs with the most flexible possible interpretation.” As observed by the Government Accountability Office, OT agreements “can be useful in attracting … companies that have traditionally not done business with federal agencies.”

By its own terms, the guide was not intended to – and does not — provide step-by-step, mandatory instructions for the exercise of OTA by the DoD similar to the instructions in the Federal Acquisition Regulation, or FAR, for traditional procurement contracts. The guide cautions readers that it “is not a formal policy statement,” and does not purport to offer a final “interpretation of statutory, regulatory and formal policy requirements.” The guide states that those seeking to enter into an OT agreement “should consult with legal counsel.”

Nevertheless, the guide covers the waterfront of the DoD’s OT tools, and provides helpful examples, definition and context. This advisory highlights some key aspects of the guide.

Keep reading this article at: http://www.mondaq.com/unitedstates/x/766534

January 2, 2019 By AMK

What to expect from ‘other transaction authorities’ in 2019

If there is one term that has punctuated government contracting in 2018, it is “OTA.”

The use of OTAs or “other transaction authority” agreements has grown significantly in the federal government over the last year, due to this contract vehicle’s ability to help federal agencies rapidly incorporate new technologies required to ensure the success of today’s complex missions.

Although this style of contract is not new to the federal contracting community (in fact, it was brought onto the scene in the 1950s to aid NASA in the space race), we can expect to see additional use of OTAs to gain access to groundbreaking technologies faster and more efficiently in 2019.

There are three things you can expect to see from OTAs in the next year and beyond.

Keep reading this article at: https://www.nextgov.com/ideas/2018/12/what-expect-other-transaction-authorities-2019/153713/

September 6, 2018 By AMK

How has federal contract spending changed over time?

DataLab, a unit operated by the U.S. Treasury Department, recently undertook an analysis of ten years of federal contract spending data. The results are thought-provoking.

Take a look at what they discovered when they examined the USAspending.gov database:

Over the past decade, federal spending on contracts increased from fiscal year 2007 through 2010, following the surge in federal funding related to the Recovery Act. As the Recovery Act tapered off in 2011, contract spending began to decrease, which accelerated following sequestration in 2013. By 2015, contract spending had fallen 27 percent from its 2010 peak, before rebounding slightly in the following years.
Seasonal trends in contract spending occur within each year. Spending tends also rise and fall on a monthly cadence, with roughly one small peak and one small drop per month. During the last month of the federal fiscal year — September — contract spending spikes, especially one week prior to the end of the government’s fiscal year.
End-of-year spikes consistently occurred across the decade, and generally followed the broad rise and fall of spending. On average, September spikes accounted for between 6-8 percent of the annual spending in a fiscal year.
USAspending.gov data captures two types of activity related to contracts: 1) the issuance of new contracts, and 2) modifications to existing contracts. Splitting spending on contracts into these two categories, DataLab found that spending on new contracts tended to spike in September. Modifications, however, displayed less variance and did not spike as drastically at the end of each fiscal year. This suggests that new contracts — not modifications—drove the spikes at the end of each fiscal year.
USAspending data also captures what the government received from a contract (i.e., goods or services.) This categorization scheme, utilizing Product and Service Codes, contains almost 6,000 different categories, ranging from Dining Facility Maintenance to Buoys. For this analysis, DataLab collapsed these 6,000 categories into seven high-level groups. Notably, contracts classified as Facilities, Equipment, and Construction, displayed about 3.5 times the level of variance over the decade as total contract spending, and over 50 times the variance of spending on Weapons and Ammunition. Unlike the other categories, contracts for weapons ammunition did not spike at the end of the fiscal year.

DataLab also looked at USAspending data to determine the relationship between the passage of continuing resolutions, new appropriations, and the amount of spending on contracts across the government. Here’s what they found:

Continuing resolutions caused contract spending to spike in the same week, which was not observed for the passage of new appropriations. These findings cohere with qualitative research conducted by the Government Accountability Office (GAO), which noted in February 2018 that “some agency officials reported delaying contracts and application times for grants while under a [continuing resolution].” If agencies are unable to issue new contracts because adequate funds are not available under continuing resolutions, needs accumulate, and then are satisfied once funding is available.
Notably, DataLab found that the passage of new appropriations resulted in a statistically significant decreases in total contracts and especially on professional services contract spending. This suggests that new appropriations allow the government to engage in longer-term budgeting, potentially facilitating forward-looking spending decisions.
DataLab also noted that research and development spending was less variable and less impacted by continuing resolutions, suggesting that this type of service is likely to follow a distinct pattern for contract issuance from the typical cycles followed by other goods and services. As one of the smallest categories of spending, it is possible that this type of contract is partially sheltered from the timing of congressional appropriations.
Other categories showed evidence of very large spikes in spending in response to congressional appropriations, such as transportation and logistic services. Further research as to why specific types of spending are more reactive to continuing resolutions would need to be done to explain why.

To see this report, including trends displayed in graphs and tables, visit: https://datalab.usaspending.gov/contracts-over-time.html

The Section 809 panel offers an important new idea on how the defense acquisition system could be improved to provide the Pentagon greater access to innovative new technologies that are rapidly developed in the private sector.

For over 60 years, the U.S. government has entered into agreements called “other transactions.”

If there is one term that has punctuated government contracting in 2018, it is “OTA.”

DataLab, a unit operated by the U.S. Treasury Department, recently undertook an analysis of ten years of federal contract spending data. The results are thought-provoking.

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